Apple winds up earnings hope for new gadgets
By Rob Cyran
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Apple is winding up investors’ earnings hopes for new gadgets. The $570 billion iPhone maker racked up another period of so-so growth in the quarter to June 28, but still with astonishing cash flow. The lower share count may fuel a stock run-up if Apple soon unveils another must-have device.
Apple’s revenue grew 6 percent from the same period last year to $37 billion. The iPad business continued to disappoint somewhat, as the number sold fell 9 percent. Yet strong Mac computer sales offered solace. Even though the company sells three times as many iPads, the price of an average Mac is nearly three times as high, and margins are plumper.
These remain sideshows, however, compared with the iPhone, which accounts for more than half of Apple’s revenue. The company sold 13 percent more thanks to booming demand in China – where sales were up 48 percent – and other emerging markets.
As for that gusher of cash flow, Chief Executive Tim Cook has paid out more than $40 billion in dividends and buybacks over the past 12 months, but still added nearly $20 billion to the kitty.
While 6 percent revenue growth isn’t bad for a giant company, investors are impatient for a watch, television or other new device. Once again, in a conference call, Cook promised investors that Apple’s pipeline was full of innovative products, but left details of what is coming, and when, characteristically vague.
Meanwhile, Apple has retired about 6 percent of its shares over the past year. And the company has room to do more as its $165 billion cash hoard continues to grow. Under Cook’s stewardship, a favorable tension is building – and despite Apple’s market value, its stock isn’t too pricey. It’s no easy task to impress consumers and investors, but now that the shares are tightly wound, they just need an iWatch, or another best-selling gadget, to set them off.